How to Use Inventory Turnover to Boost Efficiency and Cut Costs

With Just a Little Math and a Lot of Common Sense

Inventory turnover is one of those numbers that tells you whether your business is running like a well-oiled machine or slowly becoming a warehouse of forgotten dreams. It measures how often you sell and replace stock over a period, and let’s be real—if inventory isn’t moving, neither is your cash.

A high turnover means products are selling quickly, resources are being used wisely, and storage space isn’t wasted on items that no one wants. A low turnover, on the other hand, means capital is tied up in unsold goods, storage costs are climbing, and you might be stuck with more “last season” inventory than you’d like.

Let’s break down what this metric really means and how you can use it to keep your business efficient and profitable.

What Is Inventory Turnover?

Inventory turnover tells you how many times you sell and replace your stock in a given period—usually a year. It’s calculated using this formula:

Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory

Where:

• COGS is the total…